CASH IN THE BANK does not EQUAL PROFIT
You’ve been there before personally, cash in the bank but you are still broke. The reason you are checking the cash in the bank is to make sure it is still there. You know that you owe that cash to someone else or you may be holding it until you gain some more cash in order to make the moves that you need to make; either way; that cash in the account doesn’t mean what you wished it meant.
Well in business, as the entrepreneur, that burden can be the same multiplied by ten! Attempting to operate day-by-day, reviewing your bank account isn’t much of plan and it doesn’t paint a complete picture of your business. Cash in the bank means just that, that today you have money in your account. However, what is outstanding against that cash? What vendors does one owe? Is payroll close? Will there be more revenues generated soon? Do you need to use some of that cash to invest for future sales? How soon should you pay the vendors owed so as to not cripple your cash flow? Are there provisions for delays and gaps in receiving accounts receivables?
These questions are answered through the profession of bookkeeping. You would be amazed as to how effective bookkeeping can be for your company, the questions it can and will answer; and the help it will provide and the structure it will give to a growing company.
Do not underestimate the need for record-keeping, bookkeeping and documentation. Having the records to revenue beats trying to remember everyday all day and records are verifiable which means you can use those to build, expand. Your word cannot be used in this way neither can your memory. Think about it, a business that can be operated in your head, is it really a business? I think not!
